mineral sands deal article

MINERAL SANDS DEAL
Two proposals put longevity into North Perth Basin’s heavy minerals mining
Successful Australian mineral sands explorer Image Resources NL has signed memoranda of understandings (MOUs) with two established mineral sand producers that could add some life to Western Australia’s diminishing heavy minerals activity.

Author: Ross Louthean
Posted: Monday , 29 Dec 2008

PERTH -

Image Resources NL (ASX: IMA) revealed today that agreements had been signed with two unnamed mineral sand producers for some of its discoveries in the North Perth Basin.

The MOUs pave the way for releasing composite samples and resource models for Image’s deposits in the region where established miners have diminishing reserves.

Image Resources’ managing director George Sakalidis said a scoping study released by the company early this month showed its deposits could be exploited either on a stand-alone basis, by an established producer or producers, or as a combination of both options.

“The producers not only have significant infrastructure which, if not already under-utilised, is likely in the near term to become under-utilised,” He said.

“But they (the producers) also have mining and processing expertise all of which could deliver real cost savings in any mining of Image’s large – and likely expanding – resource base.

When the scoping study was released the report said said the incremental case for dredging about 2,000 tonnes per hour and dry mining 800 tph gives “a best case” given an exchange rate in the $US1-$A0.60 range (today it was $A0.66) a net present value of $A180 M ($US123.9 M) with an internal rate of return of 294%. There was potential to increase this NPV to $A298 M ($US205.2 M) if a synthetic rutile ilmenite premium is applied.

This scoping study was based on initial indicated-inferred resources totalling 6.4 Mt heavy minerals.

He said the MOUs limit the producers’ freedom to acquire Image shares. However, each producer may at any time acquire up to 5% of Image’s capital.

Clearly this move shows that with the closing of many resource finance doors with the global economic crisis, Image is showing a wish to get into a cash flow by bedding down with established regional producers.

Established mineral sand miners in the North Perth Basin include one of the world’s biggest producers Iluka Resources Ltd and the Tiwest group.

Image also has major grass roots mineral sand discoveries in the Western Australian and South Australian sectors of the Eucla Basin.